How Aldi’s Playbook Helped Woolworths and Coles Fight Back

Australia’s supermarket duopoly expands own-brand ranges to retain market share as Aldi’s growth stalls

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By LineZotpaper

Published28 August 2026

Read Time3 min

Two decades after Aldi entered the Australian market with a low-price, own-brand strategy, Woolworths and Coles have adopted the same tactic to defend their dominance, with new data showing the duopoly’s combined market share has barely shifted since 2001, holding at around 67% while Aldi remains stuck at about 9%.

When Aldi opened its first Australian supermarket in Sydney in 2001, industry observers predicted it would shake up the grocery sector dominated by Woolworths and Coles, which then controlled about 71% of the market. Aldi’s winning formula was stark: about 90% of its products were exclusive “own brands,” often priced below rival offerings.

By around 2015, Aldi had captured about 9% of Australian supermarket sales, and questions swirled about whether the duopoly would continue to erode. But recent figures from the Australian Competition and Consumer Commission (ACCC) and analysts at UBS suggest otherwise. The ACCC’s 2025 supermarket inquiry estimated Woolworths had 38% of national grocery sales, Coles had 29%, and Aldi remained at about 9%. More recent UBS data indicates Woolworths’ share has crept up to 40%, reaffirming the duopoly’s grip.

According to Flavio Macau and Reza Kiani Mavi of Edith Cowan University, writing in The Conversation, a key factor has been the incumbents’ embrace of Aldi’s own-brand strategy, but on a larger scale. Over recent years, Coles and Woolworths have expanded their private-label ranges to include thousands of products – from staples like Coles Simply and Woolworths Essentials to more subtle own brands such as Woofin’ Good pet food (Coles) or Smitten cat food (Woolworths).

“Once seen as low-quality, they now have a better reputation and can be found everywhere, from ice creams to laundry powder,” the academics note. The shift has been driven by strong consumer demand for value, particularly after a period of high inflation.

Both chains released their 2026 financial results in late August, showing that own brands now account for a growing share of sales, and are central to their pricing and loyalty strategies. The approach appears to have blunted Aldi’s competitive edge, with recent reports suggesting Aldi’s profit has plunged 20% as Coles and Woolworths fight back more aggressively on price.

Critics argue the duopoly’s expansion of own brands could stifle competition further by squeezing shelf space for smaller suppliers. However, the ACCC’s inquiry found no evidence of systemic price gouging, even as consumer groups call for greater transparency on pricing practices.

The battle for Australia’s grocery dollar is far from over, but for now the lesson is clear: when you can’t beat the disruptor, copy their playbook.

Analysis

Why This Matters

For Australian households: The expansion of own-brand products offers more affordable options in a high-cost-of-living environment, but may reduce choice for branded goods.
For the grocery sector: The duopoly’s ability to repel Aldi’s challenge suggests market concentration will persist, potentially dampening future innovation or price competition.
For policymakers: The ACCC inquiry and ongoing scrutiny of supermarkets highlight concerns about market power and supplier relationships, which may prompt further regulation.

Background

Aldi entered Australia in 2001 with a radical model: limited product range, no-frills stores, and 90% private-label goods. By 2015, it had captured 9% of the market, putting pressure on Woolworths and Coles. The incumbents initially responded with price cuts and loyalty programs, but over the past decade have aggressively expanded own-brand ranges. The ACCC’s 2025 supermarket inquiry examined competition, pricing, and supplier treatment, finding the duopoly’s combined share had stabilised at about 67% — nearly unchanged from 2001. Recent UBS data suggests Woolworths has edged higher to 40%. Aldi’s latest profit report showed a 20% decline, attributed to fiercer price competition from its larger rivals.

Key Perspectives

[Consumers]: Benefit from lower prices on own-brand items, but may have less access to independent or niche brands as shelf space shrinks. Some worry about reduced product diversity. [Woolworths and Coles]: Position own brands as a value-for-money strategy that meets customer demand and improves margins. They argue this is a natural response to competitive pressure, not anti-competitive behaviour. [Aldi]: Faces a tougher pricing environment but maintains that its unique model still offers deep value. Its market share has plateaued, and it may need to innovate to regain momentum. [Critics and consumer groups]: Express concern that the duopoly’s private-label expansion reduces competition and could lead to higher long-term prices once rivals are weakened. Small suppliers fear being squeezed out of shelf space.

What to Watch

Aldi’s next market share and profit reports, due in early 2027, to gauge if its decline continues.
ACCC or government action on supermarket codes of conduct following the inquiry’s recommendations.
Further expansion of own brands by Coles and Woolworths, particularly into premium or niche categories.

Sources

Why Woolworths and Coles are now selling thousands more ‘own brand’ products — The Conversation – Articles (AU)